New Home Property Transfer Tax Exemption in BC

New Home Property Transfer Tax Exemption in BC

Property Transfer Tax

One of the major expenses associated with the purchase of real estate in British Columbia is the property transfer tax (“PTT”). PTT becomes payable when a change in title is registered at the land title office.

PTT is taxed on the fair market value of the land and improvements and is charged at a rate of: 1% on the first $200,000; 2% on the portion greater than $200,000 up to $2,000.000 and 3% on the remainder. An additional property transfer tax of 20% may also apply to foreign buyers in certain areas of British Columbia.

New Home Property Transfer Tax Exemption

The newly built home exemption reduces or eliminates the amount of property transfer tax you pay when you purchase a newly built home.

A newly built home includes:

  • A house constructed and affixed on a parcel of vacant land
  • A new apartment in a newly built condominium building
  • A manufactured home that is placed and affixed on a parcel of vacant land
  • An already constructed house that is removed from one parcel of land and affixed to another parcel of vacant land, as long as the house hasn’t been occupied since it was placed on the new parcel of vacant land
  • A house resulting from the division of an existing improvement affixed to a parcel of land that was also subdivided, as long as this house hasn’t been occupied since the subdivision of the parcel
  • A house converted from an existing improvement on the land. The previous improvement couldn’t have been used as residential (e.g. a warehouse converted into apartments)

If you qualify for the exemption, you may be eligible for either a full or partial exemption from the tax.

If you paid property transfer tax when you purchased vacant land and you now have a newly built home on the land, you may be eligible for a refund of the property transfer tax you paid.

Do I qualify?

To qualify, the property (land and improvement) transfer must be registered at the Land Title Office after February 16, 2016 and you must be:

An individual

A Canadian citizen or permanent resident (you will be asked to provide your Social Insurance Number (SIN) or proof of permanent residency and your birthdate)

and the property must:

Be located in B.C.

Only be used as your principal residence

Have a fair market value of $750,000 or less

Be 0.5 hectares (1.24 acres) or smaller

You may qualify for a partial exemption, if the property:

  • Has a fair market value greater than $750,000 and less than $800,000
  • Is larger than 0.5 hectares
  • Has another building on the property other than the principal residence

Find out the amount of your exemption if you qualify.

Foreign entities and taxable trustees are not eligible for the exemption. If you are an individual who doesn’t qualify because you are not a Canadian citizen or permanent resident, but you become one within 12 months of when the property is registered, you may apply for a refund of the property transfer tax.

Find out if you are also eligible to claim a refund of any additional property transfer tax you may have paid.

Apply

Select or enter exemption code 49 on the Property Transfer Tax Return to apply for the newly built home exemption.

Occupancy requirements

After you have registered the property, you must meet occupancy requirements during the first year you own the property. To keep the tax exemption you must:

Move into your home within 92 days of the date the property was registered at the Land Title Office

Continue to occupy the property as your principal residence for the remainder of the first year

You will receive a letter at the end of the first year to confirm you meet these requirements.

You may keep part of the exemption if you moved out before the end of the first year. However, you must repay a portion of the amount of the exemption based on the number of days you moved out before the end of the first year.

Note: If the owner passed away, or the property is transferred because of a separation agreement or a court order under the Family Law Act before the end of the first year, the full exemption still applies.

Refund

If you qualify for the exemption, but didn't apply when you registered your home, you may apply for a refund.

Vacant land

If you purchased a vacant lot and paid the tax upon registration, you may apply for a refund if:

  • You have a newly built home on the land
  • You meet the qualifications for the Newly Built Home Exemption
  • The fair market value of the land plus the cost of the newly built home is $800,000 or less
  • You moved into your home and continued to occupy the property as your principal residence for the remainder of the first year.
  • If you move out before the end of the first year, you may be eligible for a partial refund of the tax you paid based on the number of days you occupied the property.

If the owner passed away, or the property is transferred because of a separation agreement or a court order under the Family Law Act before the end of the first year, you may still be eligible for a refund.

You must apply for a refund after the first anniversary of the registration date and within 18 months from the date you registered the property at the Land Title Office.

What Professionals Will I Need to Help Me Buy Land in Canada?

To buy a property in Canada, you will normally need a real estate agent, a real estate lawyer, a home inspector, an insurance agent, a property manager and a lender. If you buy with my help, I will connect you to the best in the industry.

I want to buy a property in Canada, but not in Victoria. Can you help?

I only sell real estate in the Victoria area, though I am happy to recommend an agent in in your desired location that can help.

Are you thinking about purchasing buy land and build your dream home or recreation property? If you’re looking for a realtor to work with you and guide you through the process, then give me a call/text at 250-858-0288.. or email info@patricksellsvictoria.com to start a conversation.

Patrick Novotny eXp Realty Victoria, BC 250-858-0288